Freedom & QAD Implementation at TST NA Trim

1. Freedom & QAD Implementation at TST NA Trim MWUG – September 2013

2. TS Tech Global Locations Company Background Name: TS TECH CO.,LTD. Founded: December 5, 1960 Headquarters: Saitama, Japan President: Michio Inoue Employees: approx. 15,000 Main Business: automotive seating, interior trim Worldwide Locations

3. TS Tech Group Companies Using QAD *Sites using Freedom ErrorProof

4. QAD Footprint at TS Tech in North America Newmarket, ON Reynoldsburg, OH (2) New Castle, IN* Athens, OH Boaz, AL Nuevo Laredo, Mexico* Hidalgo, TX* Irapuato, Mexico

5. TST NA Trim Company Profile Nuevo Laredo Plant • Established: March, 1986 • Plant Manager: Francisco Lopez • Plant Size: 17,915m2 • Products: Seat covers for Hondaand Acura Hidalgo Plant • Established: April, 2012 • President: Hiroshi Kitamura • Plant Size: 12,449m2 • Products: Laminated fabric and UL for Honda, Acura, and Mazda

6. Business Case for QAD at Hidalgo • Simple process • 3 components per BOM (vs. 10-20+) • 1 step process (vs. 3 steps) • Straight line (no WIP) • No system interface (e.g. production monitoring) • No KD lot numbers • Young operation • Low transaction volume • Small number of associates • Bad habits not established • Small scale • 11 suppliers • 62 RM parts • 126 FG parts Need to implement quickly -- less than 6-month window

7. Background of Lamination Production Differing Lengths… Foam • What is flame lamination? • Three-layers (face, foam, backing) • Semi-continuous process • High product quality expectations • Incoming quality inspection • Measure net roll length • Check for spots or runs • Outgoing quality inspection • Measure final length of material • Re-check for spots, runs, de-lamination Face Backing Not to scale

8. Hidalgo Plant Layout Trailer Yard Shipping & Receiving Office Shipping Area Receiving Inspection 2nd Foam Staging Area FG Inventory Racks Raw Material Racks N Offices Production Area Main Entrance

9. Shop Floor Operations Production Process Raw Material Racks Foam Roll Storage Finished Goods Racks

10. Problem Statement • No perpetual inventory • All record-keeping performed in MS Excel • Not scalable • Lack of data entry validation • Data integrity concerns • Time-consuming financial closing process due to manual record-keeping • Time-consuming physical inventory process • Difficult to consolidate financials at corporate level

11. A Powerful Tool… Excavator Shovel (damaged fiber-optic conduit)

12. Special Considerations • RM serialized by vendor • Not license plate; no guarantee of uniqueness • FG labels generated by internal QA inspection system (SQL database) • FG quantity varies based on inspection result • Deductions for quality defects • For shipping, actual length of rolls does not necessarily match the order quantity • Order quantity must be met, but slight overshipment allowed (max. one roll per item) • 24-hour aging period after inspection

13. Why Freedom? • Ensure accurate inventory control through real-time scanning • Efficient scanning by label serial • Faster tag inventory • Serialized traceability of material • Ensure accuracy of business processes • Receiving: validation against ASN • Shipping: picklist control; backflush validation • Integration into final quality inspection system • Potential for future introduction of full traceability system • History of successful inventory control at Nuevo Laredo plant

14. Implementation Timeline First Physical Go-Live!!! *Freedom on-site for 2 weeks, then remote support Project completed on-schedule and within budget

15. Design of Processes • Step 1: Document current process state • Step 2: Identify risks and controls • Step 3: Apply best practices to future process (re-engineering) • Step 4: Review and obtain buy-in

16. QAD Environment • QAD Version: 2011 SE, Automotive Bundle • Progress Version: 10.2B • OS: Linux Red Hat ver. 5.8 • Freedom Version: 7.70 • Server (QAD): VM Ware (remote, in Reynoldsburg) • Server (Freedom): VM Ware (remote, in Reynoldsburg) • Other QAD Partners at Location: • Report Writing: Cyberquery ver. 3.50 • Uploading of PO Shippers, Customer Schedules: SIG Connect ver. 4.1A • EDI: Gentran 4.0.02 • Repetitive scheduling (not discrete work orders)

17. Processes Using ErrorProof • ASN receipts • Transfer by label serial (license plate or reprint) Receiving • Tag inventory • 100% scanning • Transfer by serial • WIP transfer • Relabeling Cycle Count Location Transfer • Count by label serial Physical Inventory Backflush Shipping • Interface w/QA inspection system • Picklist print • FIFO lookup Scrap • Unplanned issue

18. Freedom Application Details • ErrorProof Small Site License (max. 10 users) • Installed on virtual server, hosted at Ohio data center • Labels print to wired and wireless printers • Telnet sessions on handheld scanners (7 scanners) • Desktop application for generating picklist • Administrator application on Windows • Daily reports (even Production Manager) • Inventory tag printing

19. Challenges and Lessons Learned • Modifications needed to in-house developed final inspection database • Duplicated serial numbers, no indexes in tables • Supply base not 100% controlled by company • Difficult to convert suppliers to required label format (license plate) • Over 50% of suppliers not EDI-capable (or willing) • Only 1 in 4 customers using ERP/EDI • Customer requirements must be hand-keyed • Success factors: • Thorough review of current and future processes • Daily wrap-up meetings • Production management heavily involved and using reporting tools • Accumulated experience of implementing Freedom and QAD at other trim facility

20. Inventory Variances After Launch 99.8% accuracy!!! Nuevo Laredo Hidalgo

21. Thank you for your attention! Q&A